BRRRR+Section 8 Twist in NoVA?

Question

Hello all,

I listened to Dr. Joe Asamoah's two interviews on the BP podcast (#356 and #498) and was quite inspired by what he's doing. Does anyone have any insights or experience with trying out this strategy in the NoVA area?

Richard Mollel · Answer

As for section 8 they only pay over the top in areas with limited inventory available and high demand.
For Bowie, out of the four zip codes, 20715 & 20720 have the highest above market rents, while 20716 pays slightly below market rent, and 20721 is almost at par.

https://www.princegeorgescount...

Russell Brazil · Answer

You can BRRRR in NoVa, just the margins are going to be thinner than in DC.  DC we are looking at $300-$400k gross margins, while in NoVa they might be more like $175k gross margins. And off hand, I cant think of anywhere in the MD or VA suburbs that pays substantially above market rate rents on section 8. That is really just contained to certain neighborhoods in DC in this area. (I may have heard Bowie had high sec 8 rents, but Im not positive)

James Chen · Answer

Thanks @Russell Brazil and @Richard Mollel for the helpful info! According to Fairfax County gov't, they would subsidize up to $3,059/month for a 5-bedroom unit (https://www.fairfaxcounty.gov/...), which seems to be the size that Dr. Joe targets. However, from what I can tell this is maybe middle-of-the-pack in terms of rent prices in Fairfax County. Some houses rent for less, some rent for more, so that seems to argue for the case that section 8 subsidies won't necessarily be more "profitable" then renting to regular tenants. Am I understanding this correctly?

Brendan August · Answer

@Richard Mollel Thanks I'm hoping it is similar for DC! But yea the DC Housing authority website actually has 2 prices listed. One for "with utilities" and one for "without utilities". It looks like the difference between the 2 increases as the amount of bedrooms increase but a 4 bedroom rents for $255 more if the landlord provides utilities. Definitely doesn't seem worth the risk to do that though.

Richard Mollel · Answer

Ok, not sure about DC, but in PGC, the number you see on their website is the what they will pay, and this has an assumption that the landlord is paying all utilities. If the landlord is not paying utilities (who would, right?), then subtract a reasonable utilities cost from the gross amount, ie. $200-400/month depending on the size of the property.

Brendan August · Answer

Sorry I don't have any insight into the NoVA Section 8 market but I know the approved rents in the District are extremely high but I do have a question that will hopefully help you out as well...

Does the DC Housing Authority do a market analysis on comparable rentals in the area before they agree to pay the amount listed on the website or are the rent amounts listed on the DC Housing Authority what investors are typically getting?

I just purchased a 4 bedroom house in Columbia Heights and have been using the $4753 amount listed to run my numbers, should I expect less than this?

Nick Shri · Answer

@James Chen You may luck out with Condos in NoVA with Section 8. However, you can just find renters without Sec 8 all day long in NoVA

BRRRR+Section 8 Twist in NoVA?

Most Popular Reply